[adamc]

When you are mostly based on labor and you aren't seeing significant productivity increases, you will tend to be hyperinflationary because your workers all want to do a little better than inflation. Add to that vastly increased regulation on universities over the last 30 years, and it's pretty easy to explain the current trend. It's not like they are making big profits -- look at the balance sheets of the public universities some time.

They can pay less (and in some cases are), but it is hard to attract strong academic talent that way. Getting a PhD takes a long time, and in the sciences there are likely to be a bunch more years working as a postdoc for not much. I'm not sure how much more blood they can squeeze out of that stone.

So, I agree that something needs to change, but I think it will require innovation to raise teaching productivity.